Two index-linked stocks were issued by the South African Transport Services in November 1986. They offer the investor fixed coupon payments, but their redemption values will be determined by the level of the JSE Index on April, 1990. The two stocks thus have an unknown maturity value. The paper analyses the equilibrium prices of the stocks, using option pricing equations. It derives pricing equations for both stocks, and then demonstrates the actual application of the model.
|Journal||Journal of Social, Political, and Economic Studies|
|State||Published - 1988|